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Republic Services to Buy Allied Waste in $6 Billion Deal

AP
Monday, 23 Jun 2008 | 7:18 AM ET

Disposal company Republic Services said Monday it will buy Allied Waste Industries in a $6.07 billion stock deal that would join the second- and third-largest players in the disposal industry.

Republic Services will pay Allied Waste shareholders .45 worth of a Republic share for each share held, valued at $14.04 per share based on Republic's Friday closing stock price of $31.19.

Based on the nearly 432.5 million Allied shares outstanding at April 24, the deal is worth $6.07 billion and represents a nearly 4 percent premium to Allied's closing stock price Friday.

Shareholders of Phoenix-based Allied Waste will own 52 percent of the combined company, which will be led by Republic Chairman and Chief Executive James E. O'Connor. Allied's Don Slager will become president and chief operating officer.

The companies announced June 14 that they were in merger talks, valued then at about $15.23 per share, or $6.59 billion. The news sent shares of both firms down about 5 percent and the stocks have since slipped further.

In a statement Monday, Republic Services said the combined company will have annual revenue of about $9 billion and a total market capitalization of about $12 billion. More than 35,000 employees will serve over 13 million customers in 40 states and Puerto Rico.

The transaction is expected to close by the fourth quarter, and add to Republic's earnings per share in the first year after closing.

The new company's board will consist of 11 members, including O'Connor, five independent directors from the current Republic board and five from Allied's board. The Phoenix-based company will be named Republic Services Inc. and traded under the ticker symbol 'RSG' on The New York Stock Exchange.

Republic is expected to continue its current annual dividend of 68 cents per share.

Merrill Lynch acted as financial adviser to Republic. Akerman Senterfitt and DLA Piper US served as legal advisers. UBS Investment Bank acted as lead financial adviser to Allied Waste Industries and Mayer Brown served as legal adviser.

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